- EU Prohibits Bailed Out Companies From Paying Bonuses, Dividends
EU Prohibits Bailed Out Companies From Paying Bonuses, Dividends
Back on April 1, we predicted that with European banks suspending dividends across the board, “if shareholders are impacted, why not also the biggest source of bank cash: banker bonuses.” Today, we got partial confirmation of this when the FT reported that companies given equity injections by EU member states as a result of the coronavirus will not be allowed to pay out dividends, buy back shares or provide bonuses or similar remuneration.
The terms and conditions of corporate bailouts emerged after the FT reported last week that the European Commission was exploring a further relaxation of the bloc’s rules on state aid to help ailing companies as a result of the pandemic.
Similar to the US, although in even stricter terms, bailed-out European businesses are also forbidden to take “excessive risks” or even engage in “aggressive commercial expansion”, said a document setting out amendments to the recent relaxation of state aid rules. They will not be able to buy up rivals or other operators in the same sector while still repaying the state.
The constraints are aimed at preventing “undue distortions of competition” and mirror similar restraints imposed on the banking sector at the height of the global financial crisis more than a decade ago.
Additionally, European businesses that receive an equity injection of more than 20% from a member state will also be obliged to set up a clear exit strategy from that support in the aftermath of the pandemic, although it does not appear that European taxpayers will be granted a stake and instead the only limitation will be on what management should not do, which in light of the current recession where everyone is scrambling to conserve cash, is likely redundant.
The EU is also setting out clear timelines to give companies an incentive to pay back the aid. If by 31 December 2024 the state’s shareholding has not been reduced to below 15 per cent, companies will be obliged to present a restructuring plan to the commission for approval.
“This is more flexible/lenient than the financial crisis principles where the requirement was generally to submit a restructuring plan within 6 months of the recapitalisation,” the document states.
Contrary to the terms established during the financial crisis, Brussels is also encouraging incentives for companies to exit the schemes as soon as possible. It calls for member states to be paid back as close as possible to “market terms” in order to avoid “potential competition distortion caused by the state intervention”.
“The member state shall put a mechanism in place to incentivise redemption before 1 January 2023,” the document adds.
The commission is also proposing that EU countries consider the potential sale of business units for those companies in receipt of large amounts of aid and with considerable market share in a certain sector.
“The commission is expected to ask member states to attach conditions to recapitalisations in order to preserve competition,” explains Natura Gracia, a partner in law firm Linklaters in London. “It shows that the EU has learnt from past crises.”
The constraints on bailed-out companies emerged as regulators rushed to implement a so-called temporary framework that has seen state aid rules relaxed to help companies through the pandemic. This week, competition commissioner Margrethe Vestager encouraged European countries to build stakes in companies that might be vulnerable to unfair takeover by state-backed foreign entities.
It wasn’t immediately clear if this means that banks, all of which are implicitly receiving a bailout courtesy of the ECB’s various QE programs, will see an indefinite pause in bonus payouts or if the banks are exempt and the only targets of this regulation are ordinary corporations and the continent’s small and medium businesses.
Tyler Durden
Thu, 04/16/2020 – 02:45 - German Lawyer Who Criticized Lockdown Arrested, Taken To Psych Ward
German Lawyer Who Criticized Lockdown Arrested, Taken To Psych Ward
Authored by Paul Joseph Watson via Summit News,
A German medical lawyer who criticized the coronavirus lockdown law was arrested and taken to a psychiatric ward, where she says she was violently abused by authorities.
Beate Bahner published a press release on April 3rd decrying the German lockdown laws as “flagrantly unconstitutional, infringing to an unprecedented extent many of the fundamental rights of citizens.”
“These measures are not justified by the Infection Prevention Act, hurriedly amended just a few days ago,” she asserted.
“Long-term restrictions on leaving home and meeting others, based on high-death-rate modelled scenarios, which fail to take account of actual critical expert opinions, and the complete shutdown of businesses and shops with no proof that they pose any risk of infection, are thoroughly unlawful.”
Bahner called for a nationwide protest on Easter Sunday to “end the tyranny at once,” before Heidelberg Police announced that they would seek to prosecute her for inciting Germans to break the law.
On April 13th, Bahner called her sister from Heidelberg’s Klinik fur Allgemeine Psychiatrie describing what happened to her.
After claiming she was “suspiciously” followed by a car, Bahner says she asked another motorist to call the police only for the police to show up, handcuff her and push her to the ground “with massive force.”
Actually, Ms Bahner only called for legal protests against the German Government’s extra-legal violation of the German constitution.
It is the Govt breaking State laws, not the lawyer exposing them. pic.twitter.com/dSefGkAQ7j
— Phil Greaves (@PhilGreaves01) April 15, 2020
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After being driven to the psychiatric facility, Bahner says she was treated like a terrorist.
“I asked to be allowed to sit down and was shown to a bench. Then I asked to have the handcuffs taken off, since it was actually I who had requested police protection,” she recounted.
“But instead, I was thrown to the floor again, having my head hurled onto the stone floor from a meter height, which nobody reacted to.Then I was forced to spend the night lying on the floor in some high-security Guantanamo psychiatric clinic…there was no toilet, no sink, though they did allow me water, and there was a bell I could ring, though they ignored it after the third time I pressed it.”
The lawyer was charged for incitement yesterday, with her attorney sounding the alarm bell over her treatment.
“I shouldn’t have to add Bahner’s claims of very grave abuse have untoward connotations of the darkest chapters of German history,” he said.
“The mere fact she claimed to have been so badly abused was what prompted me to write to you. Bahner is in the company of over 50 well-known experts in criticising the nationwide lockdown; I would be glad to furnish you with a list of their names. If it really is the case lawyers critical of government measures can now be intimidated using the state legal apparatus or psychiatry, and can be professionally and socially destroyed, then it is five minutes to midnight in this country.”
Bahner has won three cases in the Federal Constitutional Court and written five books on German medical law.
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Tyler Durden
Thu, 04/16/2020 – 02:00 - China Launches Survey To Learn More About Asymptomatic Cases, Immunity
China Launches Survey To Learn More About Asymptomatic Cases, Immunity
Approximately 11,000 people across ten provinces and cities in China, including Wuhan, will be randomly selected to give blood samples and throat swabs so that researchers can learn more about asymptomatic coronavirus cases, as well as immunity in people with coronavirus infections, according to the Hubei Daily.
The epidemiological survey will include 100 neighborhoods in 13 districts, and will include people who were in Wuhan for at least 14 days between January and March.
On Wednesday, China published data revealing that most coronavirus patients remain symptom-free throughout the infection.
Among 6,764 people who tested positive for infection without showing symptoms, only one fifth of them — 1,297 — have so far developed symptoms and been re-classified as confirmed cases, China’s National Health Commission spokesman Mi Feng said at a briefing in Beijing Wednesday. –Bloomberg
If true, approximately 80% who contract the hyper-virulent coronavirus become silent spreaders, while the 20% who draw the short straw experience a spectrum of symptoms which can last for more than a month – ranging from mild (80% of confirmed cases), to moderate, to critical – up to and including death.
Meanwhile, China is likely facing a second wave of coronavirus cases in November according to Caixin, citing one of the country’s highest-profile medical experts.
As we noted on Tuesday, while countries may be able to bring the deadly pandemic under adequate control by autumn, Zhang Wenhong, who heads Shanghai’s Covid-19 clinical expert team and directs the infectious disease department at one of the city’s top hospitals, said during an online livestream broadcast that this coming winter may include a “second wave” of infections in China and elsewhere.
Zhang’s comments come as Chinese officials gradually ease quarantine restrictions as part of efforts to revive the country’s economy. The East Asian nation, where the previously unknown virus was first detected last year, has seen numbers of daily new cases fall in recent weeks after recording thousands of Covid-19-related deaths and rolling out unprecedented lockdowns.
Tyler Durden
Thu, 04/16/2020 – 01:00 - They Don't Want You To Know The Truth Or Be Exposed To Differing Opinions
They Don’t Want You To Know The Truth Or Be Exposed To Differing Opinions
Authored by Mac Slavo via SHTFplan.com,
ZeroHedge and others are targets of big tech!
Not only has our favorite site for financial news been banned from Twitter, but I recently noticed that when I went to click on its articles shared by others, I end up getting a special disclaimer that gives the vibe that it’s a virus site and is about to crash my computer!
SHTFPlan.com, which is run by a 100% U.S.-born journalist, was identified as a Russian bot in 2016 by the Washington Post!
After this, our income collapsed by 95%! Other alternative media companies, especially anyone who gave President Trump a fair or favorable review, were viciously attacked as being Russian or were simply attacked by Google by reducing their revenue potential.
If that wasn’t enough, Google began to blacklist sites to destroy our search results and bury us!
This is a war, and to be honest, it’s one that we deserve to lose. I’m as guilty as anyone for using Google for search results, Twitter as a news aggregator in the morning, and I still go to CNBC to get stock quotes.
That ends now. I should have ended it years ago, but with the coronavirus, I now see the mainstream press and its elitist master are going for the final death blow to our liberty – a decapitation strike that has been very successful so far.
They’ve managed to get Americans to stay home, even from church on Easter Sunday. I’m not religious at all, but I was depressed last Sunday when realizing that the government had an enormously successful lockdown of Americans and there wasn’t even a single protest I could find to cover.
Where is the tea party? The Occupy Wall Street crowd? Bernie and Trump supporters? Ron Paul people?
F*CK! And then I look in the mirror and realize I didn’t protest, either.
NO MORE! ENOUGH!
If you’re interested in opening up your business, going for a walk on the beach, taking a hike, or visiting a park with your kids, print this out. It’s a permission slip that allows you to live your life and pursue your dreams.
Download it now and give it to any of these people who are following orders – let them be on the wrong side of history.
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GOOGLE is doing whatever it can to demonetize SHTFplan.com and shadow-ban us. During these TOUGH financial times, we ASPIRE to stay completely independent and pay our full staff so we can continue to deliver VALUE to you. It is possible for you to HELP us by supporting our COVID-19 expert survival report HERE! Thank You, SHTFPlan.com Staff
Tyler Durden
Thu, 04/16/2020 – 00:10 - US Space Command Blasts Russia's 'Hostile' Anti-Satellite Weapon Test
US Space Command Blasts Russia’s ‘Hostile’ Anti-Satellite Weapon Test
It appears Trump’s newly establish Space Command has something to keep it busy with as Russia on Wednesday flexed its muscle in space in a new test of what’s being described as a ground-based, direct-ascent anti-satellite weapon (or ASAT weapon).
Space Command issued a condemnation later in the day Wednesday against the potential “threat” and “act of aggression,” with SPACECOM chief Jay Raymond saying, “Russia’s DA-ASAT test provides yet another example that the threats to U.S. and allied space systems are real, serious, and growing,” according to an official statement.
Satellite in Earth orbit file image. “The United States is ready and committed to deterring aggression and defending the nation, our allies, and U.S. interests from hostile acts in space,” the statement said.
SPACECOM didn’t specify where the ASAT weapon was aimed during the test, believed to have been a Nudol ballistic missile, and crucially indicated it wasn’t tracking any debris.
Such tests are deeply controversial given they involve live targeting of an object in space, though it’s believed the Kremlin has actually yet to be successful even after nine reported Nudol space missile tests going back to 2014.
File image of 2016 launch of Russian Soyuz 2.1a rocket carrying Lomonosov, Aist-2D and SamSat-218 satellites. AP image. As The Verge describes:
ASAT tests are also widely condemned by many in the space community, as these demonstrations typically create hundreds to thousands of pieces of debris that can last for months, and even years, in orbit. Because these tests are high speed and high impact, the resulting debris can spread far and wide. Those pieces then pose a threat to other functioning spacecraft. A fast-moving piece of junk can render an operational satellite inoperable if they hit head on.
Though upon last year’s establishment of the US Space Force, Moscow itself said it dangerously upped the ante to ‘weaponize space’ – it’s Washington now calling out ‘Russia’s hypocrisy’.
“This test is further proof of Russia’s hypocritical advocacy of outer space arms control proposals designed to restrict the capabilities of the United States while clearly having no intention of halting their counterspace weapons programs,” Gen. Raymond said.
Air Force Gen. John “Jay” Raymond stands with President Donald Trump during a ceremony to establish the US Space Command last August, via AP. Last year while Trump’s initiative for a military branch which would deal exclusively with threats to US national security in space and related interests was being debated, one key objection raised was that it could spark a new race for the weaponization of space.
However, hawks argued that it would be inevitable and that if the administration and Pentagon didn’t act, Russia or China may do it first, leaving the US incredibly vulnerable in this new domain. It appears the process is already well underway.
Tyler Durden
Wed, 04/15/2020 – 23:50 - WHO & Its Never-Ending List Of Errors
WHO & Its Never-Ending List Of Errors
The World Health Organization (WHO) is a primary agency of the United Nations responsible for international public health. However, in recent times, the WHO has been criticized for either acting too late or too little during a health crisis. There have been instances where WHO was caught grossly unprepared with its course of action. Other times, the scientists and researchers at WHO have made laughable errors while preparing reports.
This begs the question:
Why WHO makes so many mistakes?
Is it deliberate?
Or is there some other reason behind WHO’s never ending list of errors?
Starting with the recent coronavirus outbreak, here are some of the incidents where the World Health Organization committed inaccuracies, mistakes and blunders:
WHO blunders in Coronavirus Risk Assessment
The Geneva-based UN agency had – in its earlier reports – said the likelihood of the coronavirus outbreak turning into a global risk was ‘moderate’. However, later WHO acknowledged that they made an error in their previous reports assessing the risk.
In its report a few days later, WHO said the risk was “very high in China, high at the regional level and high at the global level.” They also admitted that the earlier reports had incorrectly mentioned that the global risk was moderate.
When asked about the mistakes, Antoine Flahault, co-director of the Swiss School of Public Health, told AFP that “It’s a mistake. It’s definitely a sizeable one… but I really think it’s a mistake that has now been corrected.”
WHO Chief Tedros Adhanom Ghebreyesus took to Twitter and apologized for the erroneous report:
WHO deeply regrets the error in this week’s situation report, which inserted the word “moderate” inaccurately in the #coronavirus global risk assessment. This was a human error in preparing the report. I have repeatedly stated the high risk of the outbreak https://t.co/Qp871ObmdE
— Tedros Adhanom Ghebreyesus (@DrTedros) January 29, 2020
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WHO chief was already under severe criticism for its delay in declaring the coronavirus outbreak as an emergency. Some reporters even hinted that the decision was politicized. The fact that the WHO failed to provide the correct risk assessment has only made matters worse for the WHO chief.
Taiwan demands apology from WHO Chief
Taiwan demanded an apology from the WHO chief following his controversial allegations against the country where he accused the island nation and its people of racial abuse.
In a press conference, WHO Director-General Tedros Adhanom Ghebreyesus made serious allegations against Taiwan. The WHO chief said that he has been a target of racial insults for the past three months, which he alleged originated from the island of Taiwan.
WHO has been criticized for its handling of the corona pandemic including its treatment of Taiwan. The UN agency – due to the pressure from China – does not recognize the sovereignty of Taiwan. The island nation is still considered a territory of mainland China. The exclusion means Taiwan is kept out of the loop and is unable to share and receive crucial data related to the coronavirus pandemic.
When RTHK journalist – in a video call – questioned WHO advisor Bruce Aylward about Taiwan, the top WHO doctor was lost for words, and abruptly ended the call.
Bruce Aylward @WHO did an interview with HK’s @rthk_news When asked about #Taiwan he pretended not to hear the question. The journalist asked again & he even hung up! Woo can’t believe how corrupted @WHO is. pic.twitter.com/uyBytfO3LP
— Studio Incendo (@studioincendo) March 28, 2020
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WHO admits making False Report on India
A situation report released by the WHO wrongfully placed India at a stage of community transmission. Only when asked to clarify, the WHO was forced to admit its blunder to an Indian News channel saying that India has a cluster of cases and not community transmission.
A community transmission happens when the cases of infection rise exponentially with multiple, untraceable sources. The Indian government firmly denied that the country has reached stage three or community transmission.
The joint secretary of Health Ministry, Lav Aggarwal, said that “If it happens, we will be the first to tell you. We will tell people to be especially alert… There is no community transmission.”
Oxford-based publication stops using WHO’s Coronavirus data, citing errors
Our World in Data – an online publication based at the University of Oxford – has stopped using Word Health Organization data related to coronavirus for its research. The publication announced that they no longer base their models on the WHO data citing errors and other issues.
Instead, the researchers are using data provided by the European Centre for Disease Prevention and Control. The errors and inaccuracies, which Our World in Data documented in a separate report, showed various discrepancies in the situation reports released by WHO between February 5 to March 16.
The lack of reliable data available during the coronavirus outbreak has been a major source of frustration for economists, statisticians, researchers, and public policy makers.
Finland says WHO’s Coronavirus Protocol doesn’t Work
In a startling disclosure, a senior Finnish health official has dismissed a World Health Organization advisory saying WHO doesn’t understand pandemics and that their Coronavirus testing protocol is illogical and doesn’t work.
A senior Finnish health official dismissed a World Health Organization (WHO) advisory to test as many people as possible for coronavirus, arguing that such a measure would be completely illogical when combating a pandemic. Finland’s head of health security, Mika Salminen, took aim at the notion that stopping the spread of Covid-19 requires testing on a mass-scale.
“We don’t understand the WHO’s instructions for testing. We can’t fully remove the disease from the world anymore,” she said, adding: “If someone claims that, they don’t understand pandemics.”
WHO apologizes to UK’s Port Talbot
In 2018, the World Health Organization issued an apology for wrongfully stating that Port Talbot is the most polluted town in the United Kingdom. The global health agency said that they made an “oversight” in the data which suggested that air pollution in Port Talbot is worse than the UK’s largest cities.
The WHO database showed that the south Wales town had a fine pollution level of 18 micrograms of M2.5 pollution particles per cubic metre of air. In comparison, London had 14 micrograms while Manchester had 13 – all above the national guidelines of 10 micrograms.
The then WHO director Dr. Maria Neria later described the figures as “erroneous” and said that the air pollution level for Port Talbot was instead measured at 9.68 micrograms and not 18 as earlier suggested.
She said: “The PM2.5 level for the year 2015 for Port Talbot should be 9.6853 (and is rounded to 10 in the updated excel sheet) and is noted as ‘measured’. The PM2.5 was erroneously featured as a converted (estimated) value of 18. The World Health Organisation has taken immediate steps to rectify this on its WHO web site, and in the database. We regret that this error happened.”
WHO excludes tuberculosis from Global Priority List
In 2017, the WHO compiled the first-ever global priority list for antibiotic-resistant bacteria. It included 12 families of bacteria that WHO considers ‘greatest threat to human health’ and for which there is an urgent need for new antibiotics.
Surprisingly, the list did not include the bacteria that causes tuberculosis – even though TB causes more deaths than any other infectious disease. According to WHO estimates, approximately 10 million people contracted this airborne disease in 2015 alone. What’s more, tuberculosis has developed a great resistance to the available antibodies. The decision to not include Mycobacterium tuberculosis bacteria on the list had confused many experts.
In its defense, WHO said that “it is already a globally established priority for which innovative new treatments are urgently needed.” The response from WHO was face-saving at best. If it is already a globally established priority, then why not include it on the list?
When WHO faked a Pandemic
An exclusive report by GreatGameIndia revealed how in 2009 WHO prematurely declared ‘swine flu’ a pandemic which resulted in a surge of vaccine orders. The rich and affluent nations were quick to purchase the vaccines for their people. Ironically, most deaths occurred not in Europe but in Africa and Southeast Asia.
In his controversial book renowned author Stuart Blume discloses that many of the most influential advisers, at both World Health Organisation (WHO) and national levels, are paid consultants to the vaccine industry raising a very serious question – that the WHO might be working for the vaccine industry’s interests and not the people – the reason why 10 years ago WHO faked a pandemic.
Should WHO be Dismantled?
The consistent pattern of blunders being committed by WHO raises serious questions on its efficiency in dealing with the lives of people. The amount of errors on a regular basis suggest WHO’s gambling-approach to world health-crisis. Past experiences shedding light on WHO being used as tool of the vaccine lobby have led many experts to call for dismantling of the WHO.
Can the World Health Organization (WHO) still be reformed or must it be reborn? Can it address concretely and effectively the challenges it is facing? Should WHO be dismantled? These are important questions, not only for the next director-general but perhaps even more for the member states who are the real “owners” of WHO.
Tyler Durden
Wed, 04/15/2020 – 23:30 - Moscow's Communists Warn "There Will Be Mass Starvation" And Protests As Coronavirus Slams Russian Economy
Moscow’s Communists Warn “There Will Be Mass Starvation” And Protests As Coronavirus Slams Russian Economy
As Russian lawmakers and the government led by Vladimir Putin, who has taken a step back and is allowing his prime minister and other government officials to lead the response, plot to offer assistance to small businesses in and around Moscow, and elsewhere, members of the opposition warned Moscow’s mayor that “mass starvation” might ensue if the government fails to rescue small businesses.
According to the Moscow Times, the leader of the Russian Communist Party in Moscow’s Duma warned that unemployment could more than triple resulting in as many as 8 million adult Russians out of work. If that happens, and Muscovites aren’t provided with enough money or food, people will starve, as President Putin’s “Non-Working Month” wreaks havoc on the Russian economy.
The letter was provided to one of Moscow’s largest business publications, which published it first.
“Failure to take [support] measures in the coming months may lead to mass starvation…In the event of spontaneous unsanctioned protests attended by several thousand residents, all responsibility will fall on Moscow’s executive authority,” said party leader Nikolai Zubrilin.
Among other steps, the opposition reportedly suggested that the city dole out 20,000 rubles ($250) to all Muscovites to help pay all of their utility bills and groceries for the year out of the city budget and suspend loan payments until Dec. 31. To finance these expenses, the Communists want to reduce spending on Moscow’s sprawling renovation program, metro construction and other “non-essential” city construction projects.
The Communist Party’s letter comes after another opposition party, Yabloko, proposed to reroute 300 billion rubles ($3.8 billion) of the city’s infrastructure and entertainment budget toward aid for small businesses and workers.
About one-third of Russian companies have forced workers to take leave without pay since the beginning of Putin’s “non-working” period, which began late last month.
Russia reported a record batch of new cases for the fourth day in a row on Wednesday, with 3,388 new cases, bringing the total to 24,490 cases in total. Confirmations continue to accelerate despite the fact that the country has been on lockdown for two weeks. Putin was one of the first world leaders to resort to travel bans, but like Trump, his government did little to prepare for the coming onslaught in late February and early March.
Tyler Durden
Wed, 04/15/2020 – 23:10 - Man Waiting For $1,700 Stimulus Check Finds $8.2 Million In Bank Account Instead
Man Waiting For $1,700 Stimulus Check Finds $8.2 Million In Bank Account Instead
With some 80 million people expecting stimulus money to hit their bank accounts starting Wednesday in the biggest and unprecedented instance of the government passing helicopter money directly to Americans’ pockets in history, there are bound to be mistakes and errors.
A volunteer firefighter in New Chicago, Indiana was awaiting a $1700 stimulus payment but upon withdrawing a mere $200 from his dwindling available balance at an ATM last Friday was shocked to find his remaining balance $8.2 million.
Firefighter Charles Calvin held on to the ATM receipt showing he unexpectedly had over $8 million in his account. Apparently, the US Treasury — or possibly the bank itself, it’s unclear which — made a huge mistake in making Charles Calvin an overnight millionaire.
The story originated in WGN9 Chicago and quickly went viral:
“I went to the ATM at the Family Express and once I withdrew $200 out of my account I looked at the available balance still left in my account,” he said.
He said his account had $8.2 million in it. He was only supposed to receive $1,700.
Not believing what he was seeing, he ran his card again but it said the same thing.
The millions may have stayed in his account over the weekend before it appears someone on the other end realized the massive error. Calvin says he notified his bank upon opening in order to investigate the funds’ origins.
Charles Calvin’s ATM receipt The Times of Northwest Indiana. In disbelief he had gotten both a friend and store clerk to verify that what he was looking at was real.
He went to the clerk at the gas station where the ATM was to ask if there was something wrong with the machine, but no issues had been reported, he recalled.
“I showed her the receipt and she looks at the receipt, she looks at me, looks back at the receipt,” he told NBC Chicago in a separate interview. “She said, ‘You have this much money in your account?’ I said, ‘No, I am poor. I’m over here trying to get money out so I can pay my rent’.” — CNBC
By Monday the bank said they didn’t see that balance in his account anymore, but did verify his stimulus money was sent. CNBC later reported the bank thinks it was actually an ATM error.
“It kind of sucks,” Calvin told WGN9. “You go from being a millionaire one second then back to being broke again. But hey, once you’re poor you don’t have anywhere else to go but up.”
It’s still unclear exactly what happened, but its entirely possible that with Washington passing around trillions – it could very well happen again.
“Calvin still isn’t sure if this was an error on behalf of the federal government, his bank or the particular ATM he used, but he said he’s just glad he did end up with the amount he was entitled to,” WGN9 wrote.
Tyler Durden
Wed, 04/15/2020 – 22:50 - Here Come Another 6 Million Jobless Claims
Here Come Another 6 Million Jobless Claims
After three consecutive weeks of record breaking initial jobless claims, which cumulatively add up to nearly 17 million lost jobs…
… brace for more of the same, even if with a modest improvement because after last week’s 6.6MM print (which in turn was a small decline from the 6.9MM the previous week), the median consensus forecast expects a 5.5MM report tomorrow at 830am, with some notable outliers such as Deutsche Bank which has gone all the way predicting a record 8MM initial jobless claims with JPM Securities and BofA not far behind, at 6.6MM and 6.0MM, respectively (bizarrely JPMorgan Asset Management is on the other end of the spectrum expecting just 2MM claims to be filed in the current week – how one can bank can have two polar opposite forecasts at the same time is precisely why Jamie Dimon is richer than you).
Ignoring JPMorgan, we focus on Bank of America’s forecast, which once again runs through local news sources to get an early feel for how jobless claims are likely to evolve in the next report covering the week ending April 11, released tomorrow.
This week BofA was able to estimate implied figures for 18 states, versus 16 in last week’s analysis. That said, these 18 states were generally smaller, which adds to forecast uncertainty. For these 18 states, BofA calculated a total of 1.6MM NSA, which would be a 5.6% decline from the prior week’s level of 1.7MM.
Applying a similar % decline to total NSA claims in the US and applying this week’s seasonal factor, seasonally adjusted claims would end up in the range of 6.1-6.2MM. The latest Google Trends data also suggest that interest in filing claims waned somewhat.
The takeaway is that jobless claims are likely to see some moderation but remain near record levels. As such, the bank revised downs our latest forecast to 6.0mn from a preliminary forecast of 6.5mn.
What does this mean for unemployment?
As mentioned above, over the past three reports there has already been nearly 17MM initial jobless claims, and if the latest forecast is correct then that will rise above 23MM. Does this mean unemployment will increase by 23MM? It’s important to note that anyone can file an initial jobless claim even if they are not eligible, which can lead to an inflated number. As such, continuing claims-people who are actually receiving unemployment benefits-has historically tracked much closer with changes in the unemployed. The former generally undershot the latter during the last two recessions, but could track more closely this time around given the expanded eligibility of self-employed and gig workers, who are normally captured by the household survey, for unemployment benefits.
So what do the claims data suggest for the April BLS jobs report? We need to monitor claims activity between the March survey period of the week ending March 14 and the April survey period of the week ending April 18. The focus is on continuing claims, which lags initial jobless claims by one week. So far, we only know what has happened in the first two weeks (the second half of March)-continuing claims rose to 7.5mn from 1.8mn two weeks prior, reflecting an increase of 5.7mn. Considering 9.9mn initial jobless claims over that period, that would suggest a high 58% approval rate.
So if we assume a 60% approval rate and initial jobless claims averaging around 6mn over the next three weeks, that would imply an additional increase of 10.8MM in continuing claims, or 16.5MM in total over the five week survey period.
This means that if there was a one-for-one change in the level of unemployed, the unemployment rate would reach 14.5% in April from 4.4% in March, all else equal. In other words, get ready for a new record… while stocks most likely soar on their way back to all time highs.
Tyler Durden
Wed, 04/15/2020 – 22:42 - Pennsylvania Senate Votes To Override Democrat Governor's Stay-At-Home Order
Pennsylvania Senate Votes To Override Democrat Governor’s Stay-At-Home Order
The Pennsylvania senate has passed a measure which would partially reopen the state by lifting the lockdown on most of the state’s businesses imposed by Gov. Tom Wolf (D), according to The Hill.
Passed by the Senate 29-21 on Wednesday, SB 613 would require Wolf’s office to align state policy with federal guidelines in determining which businesses will be allowed to reopen during the COVID-19 pandemic. Businesses which can safely operate with mitigation strategies in line with the CDC and Cybersecurity and Infrastructure Security Agency’s guidelines would be allowed to operate, according to language in the bill approved by the Republican senate.
The measure was sent to Wolf’s desk for his signature or veto. He has given no indication what he will do – however earlier this week he joined a coalition of northeastern governors from Delaware, New York, Rhode Island and Connecticut, who are developing a plan to determine when it would be appropriate to reopen, and how it would be done.
Needless to say, PA Democrats aren’t pleased with SB 613.
“The Pennsylvania GOP has a storied history of passing irresponsible legislation, but even I’m surprised they’ve stooped so low,” said Democratic Legislative Campaign Committee President Jessica Post in a statement. “Republicans have sent the message loud and clear: they don’t care about Pennsylvania families or the lives that will be lost should this legislation become law. The GOP’s focus should be on saving lives, not saving the stock market.”
Republican state Rep. Mike Jones told WGAL that the process which businesses could follow to apply for waivers was unclear.
“I think the waiver process has been extremely inefficient. We’re concerned it’s been very unfair. The problem is it’s also not been made public,” said Jones, adding “Those are the big three that virtually every other state in the nation, including many of the surrounding states, continue to operate, and it’s coming at the expense of our state.”
Tyler Durden
Wed, 04/15/2020 – 22:30 - Houston: The Banks Have A Huge Problem
Houston: The Banks Have A Huge Problem
For many years after the financial crisis, US commercial banks were mocked when instead of generating earnings the old-fashioned way, by collecting the interest arb on loans they had made, or even by frontrunning the Fed with their prop (and flow) trading desks, they would “earn” their way to just above consensus estimates by releasing some of their accumulated loan loss reserves, which thanks to creative accounting, would end up boosting the bottom line. The thinking here went that having suffered massive losses during the financial crisis “kitchen sink” when all banks suffered crushing losses to they would get bailed out, banks would then “recoup” billions in losses over time that would be run through the income statement as a reversal of accrued loss provisions.
Well, after the longest expansion in history, it’s time for this process to go into reverse, and instead of releasing loan loss reserves the banks are now starting to build them up again in preparation for a wave of consumer defaults due to the US economic shutdown.
As we reported earlier, this big story from earnings season so far – now that all major US money center banks have reported earnings – has been how much in loan loss provisions and reserves have the big US banks taken as precaution for the economic upheaval due to the coronacrisis. As shown below, on average most banks – this time including the hedge fund known as Goldman Sachs which has since pivoted to becoming a subprime lender to the masses with “Marcus” – saw their loan loss provisions surge by roughly 4x from year ago levels, with JPMorgan’s jumping the most, or just over 5x, hinting the other banks are likely underprovisioned for the storm that is coming.
Alas, these provisions amounts are nowhere near enough if history is any indication.
What if instead of using JPMorgan as a benchmark, one takes the financial crisis as a reference: after all, we already know that both GDP and unemployment will be far, far worse in Q2 compared to even the worst levels of the financial crisis, something today’s Empire Fed number vividly demonstrated…
… and even though the duration of the coming recession remains unclear and is a function of how quickly the coronavirus vaccine is developed, it is more than likely that total loan losses will match, if not surpass what happened in 2008, especially since this time the crisis is global and not just US based.
So as banks are set to be hit with tens of billions in charge offs – for which they are trying their best to reserve even if they have no idea just how bad the hit will be – we decided to look at what the banks did in the aftermath of the financial crisis. What we found is that most banks reserved total losses anywhere between 4 and 6% of total loans. This time around? So far it is less than 2%, as shown in the chart below.
This means that there is a reason why banks did not want to discuss what their future provisions would and could be – because they know very well that if the financial crisis is a template, there is a long way to go before banks are properly provisioned. As an aside, BofA CFO Donofrio was almost angry on a few occasions when responding to questions how much more reserves in Q2 the bank would need, saying the bank reserves based on what we know at the moment, and that if he knew how much higher reserves would be he’d “add them now.”
Well, if he won’t add them now, he will add them in Q2, when loan loss provisions will explode, and we expect bank loss expectations will soar by double digits across most banks as the ghost of 2009 loan losses fully materializes.
So to put it all in context, so far the Big 4 banks have reserved an additional $24BN in Q1 for future loses. But if the GFC is any indication of the defaults that are about to be unleashed, the real amount of losses, discharges and delinquencies will increase 3x-4x compared to the current baseline, meaning that over the next several quarters, banks will have to take another $75-$100BN in reserves on loans that go bad, wiping out years of profits, which were used not for a rainy day fund but to pay for – drumroll – buybacks.
This, to put it mildly, is a major problem for banks which until now were seen as generously overcapitalized, because if the US banking sector is facing $100BN (or more) in loan losses, then the Fed will have no choice but to once again step in and bail out the US financial sector.
How will we know if banks are indeed facing an Everest of loan losses instead of a mole hill? Keep an eye on those charge-off updates. While they have yet to pick up, once they do it will be an avalanche of consumers refusing or unable to pay down their loans, sticking banks with the loss. The only question then is whether the banks will stick taxpayers with what is shaping up as yet another taxpayer bailout of the US financial system.
Tyler Durden
Wed, 04/15/2020 – 22:12 - Newsom Announces $125 Million In COVID-19 Funds For California's Illegal Residents
Newsom Announces $125 Million In COVID-19 Funds For California’s Illegal Residents
California Governor Gavin Newsom (D) announced on Wednesday that illegal immigrants over the age of 18 would be entitled to $500 each during the coronavirus pandemic.
Paid for with a mix of taxpayer funds and charitable donations from corporations and philanthropists, approximately 150,000 adults out of an estimated 3 million living in the state illegally would receive the benefit.
The fund, totaling $125 million, will be comprised of $75 million from taxpayers, with charities committing to raise another $50 million on top of that. So far they’ve raised $5.5 million of that from several entities, including the Blue Shield of California Foundation, the California Endowment, the Chan Zuckerberg Initative, the James Irvine Foundation, the Emerson Collective and an anonymous donor, according to Fox News.
“We feel a deep sense of gratitude for people that are in fear of deportations that are still addressing essential needs of tens of millions of Californians,” Newsom said on Wednesday, noting that 10% of the state’s workforce consist of illegal immigrants who paid $2.5 billion in state and local taxes last year.
“Their personal information will not be required to get those support,” Newsom said of the recipients, adding that money will not be distributed based on income.
California has been seen as the most aggressive state in the nation when it came to giving benefits to immigrants living in the country illegally. Last year, California became the first state to give taxpayer-funded health benefits to low-income adults 25 and younger living in the country illegally. This year, Newsom had proposed expanding those benefits to seniors 65 and older.
The move by California came as some Democrats in Washington, D.C., have been lobbying to include payments to illegal immigrants in stimulus packages. –Fox News
The state has even provided immigrants with a website to help them access funds.
Included in the $2 trillion federal stimulus package recently passed by Congress and signed into law by President Trump is $1,200 per adult and $500 per child, distributed to those with Social Security numbers as well as working legal immigrants.
Tyler Durden
Wed, 04/15/2020 – 22:10 - Here Is Goldman's Vision Of What Reopening The Economy Will Look Like
Here Is Goldman’s Vision Of What Reopening The Economy Will Look Like
Two days after Goldman introduced its US lockdown index and Social Distancing Index, the bank is out with a follow up report putting this indexes to practical use in setting up a framework for what a reopening of the US will look like now that the daily number of new confirmed virus cases is plateauing and big data measures indicating a sharp decline in the true number of new
cases.So here is Goldman’s chief economist Jan Hatzius explaining how “Reopening the economy” will look like.
Reopening the Economy
The US is now largely in lockdown mode and social distancing has increased nationwide. Our US Lockdown Index—a measure of the GDP-weighted share of the country that has shut schools, closed non-essential businesses, and issued stay-at-home orders—has now reached 86%, as shown in Exhibit 1. Virus fears and lockdown orders have led to much greater social distancing, with roughly 50% declines in the share of time spent at workplaces and retail stores and a 25% increase in time spent at home.
Relative to the lockdown measures in place in other major economies, current US measures are slightly less tight than average, according to an index developed by researchers at the University of Oxford. Exhibit 2 shows that the US response is currently much less stringent than in Italy, France, and Spain, but more stringent than in Sweden or China.
The timing of reopening depends first and foremost on controlling the virus. How far are we from reaching that point? In a survey last week, a panel of experts on infectious disease modeling predicted that the peak rate of COVID-19 hospitalizations is most likely to be reached this month or in May, though they assigned a probability of only slightly under 50% to a later peak, as shown in Exhibit 3. Reducing the spread to a comfortable level would then take at least a few weeks after that point.
The latest data on the pace of virus spread are encouraging, suggesting that lockdowns have paid large dividends. The count of confirmed new COVID-19 cases has plateaued and perhaps even begun to decline, as shown in Exhibit 4. Our model of the outbreak in the short run—based on a time series analysis using an international panel of case counts—projects a decline in the growth rate of active cases over the next week, in line with the experiences of countries further along in their lockdown timelines.
Measures of virus spread based on big data are even more encouraging and suggest that the true number of new cases actually peaked a while ago, as shown in Exhibit 4. Data from Kinsa that aggregate readings from web-linked thermometers show that the nationwide rate of influenza-like illness is now well below normal seasonal patterns. In addition, Google searches for “loss of smell”—a symptom that has proven an effective way to track the virus spread—have fallen to roughly one-seventh of their peak US level. These measures appear to lead the official count of cases confirmed by testing by 2-3 weeks.
What Will Reopening Look Like?
Absent a vaccine or scalable treatment breakthrough, reopening will have to remain gradual.
There has been some enthusiasm recently about the possibility that far more people than initially believed have been infected but have remained asymptomatic or uncounted for lack of testing. While some hope that this means that “herd immunity” could be close at hand, this appears unlikely. New evidence from full population or random sample testing summarized in Exhibit 5 suggests that the share of the population that has been infected is indeed likely much higher than case counts confirmed by testing imply. But it still appears to be well below the level required for herd immunity— perhaps half of the population. Having already chosen to lock down, governments are very likely to discourage the rapid virus spread required to reach that threshold quickly because of the associated traumatic public health consequences. Moreover, while experience with past coronaviruses suggests that people who are infected will likely have at least some period of immunity, much remains unknown about immunity to Covid-19.
Because of the risk of renewed virus spread, the public will have to be persuaded that any plan for partial reopening is safe. After all, as we recently showed, most of the increase in social distancing in the US has been a voluntary reaction to virus fears, not a response to government lockdown orders.
We see a few prerequisites for reopening: further declines in confirmed new infections, some excess capacity in hospital systems, greater ability to test large numbers of people quickly, and the ability to trace5 and quarantine those who have come into contact with infected people in order to control future outbreaks. These goals look achievable in the US in coming months, though there is still great uncertainty about the feasibility of controlling virus spread during reopening.
Once those conditions are met, reopening is likely to begin with a very gradual relaxation of lockdown measures. Because the initial spread was slowed by social distancing, the US will have to reverse course very cautiously to avoid a second wave of virus spread. The speed of reopening is likely to vary across the country based on local conditions such as virus prevalence and healthcare capacity.
Many possible adjustments to office and factory work arrangements, commercial activity, and social life can help to reduce the risk of virus spread as reopening gets underway. The middle column of Exhibit 6 highlights some options. Adjustments such as the use of masks, hand-washing, more frequent deep cleaning, routine health checks, maintaining physical distancing, and limitations on gatherings might apply to most areas of public life. Reduced density could be achieved through staggered shifts at work sites or lower capacity limits on public transit or at restaurants and other commercial and cultural locations. And life might reopen to a different degree for different groups, with those who are immune returning first, while those most at risk continue to limit social interactions until a vaccine is available.
We see two possible approaches to the order of reopening.
The optimal approach might start with activities whose reopening offers maximum economic benefit for a given “cost” of virus risk, with total permitted activity constrained to a level that keeps virus spread under control.6 In practice, measuring this might be difficult. Our Asia economics team found that closings of workplaces and public transport and cancellation of public events show the greatest cross-country correlation with service-sector activity, while restrictions on internal and international travel appear to matter less. But estimating the “cost,” virus transmission risk, might be more challenging. One implication of this approach is that economic activity that can be conducted nearly as well from home as from a work or commercial site should generally come later in the reopening order.
The natural approach might instead proceed from the safest activities to the most dangerous, as people initially limit their out-of-home activities to those with the least risk of infection. Exhibit 7 illustrates how this might look from an occupational perspective. The exhibit ranks occupations from left to right based on how much physical proximity to others they require according to occupational survey data.
Absent strong government intervention, the actual path of reopening is likely to fall somewhere in between these two approaches. While the first approach might be optimal from a centrally organized perspective, the private economy would not necessarily arrive at that approach on its own because of incomplete information about virus risk and a failure of businesses and individuals to account for the virus transmission externalities of their own activities.
Lessons from Foreign Experience with Reopening
Several countries have already started the process of gradually reopening their economies from virus lockdowns or have announced plans to start soon. These foreign experiences provide a glimpse of what reopening might look like in the US.
We look first at China, which is furthest along in the reopening process. The majority of provinces in China have now lowered emergency response levels, including Hubei province, the epicenter of the initial outbreak. However, precautionary measures remain in place, such as temperature checks at workplaces and restrictions on movement based on health status.
Industrial activity in China has recovered significantly as virus control measures have eased, with our Coronavirus China Industrial Activity Tracker now down just 8% compared to the year-ago level. Consumer activity has also rebounded quickly, though the level remains weaker, with our China Consumer Activity Tracker still 25% below the year-ago level (Exhibit 8) and spending on consumer discretionary categories particularly weak. We expect the US to exhibit similar patterns, with a quicker pace of recovery in manufacturing than in consumer services. However, we expect a slower overall pace of recovery in the US than in China because the US has a less manufacturing-focused economy, virus control is likely to be less thorough, and the reopening process will be less centrally directed.
Other countries in Asia have imposed or extended lockdowns and enforced social distancing. Malaysia, the Philippines, and India recently extended lockdowns, and Singapore and Japan recently escalated their response to the virus due to spikes in infections, as noted in Exhibit 9. Most countries have moved to more stringent policies over time, and countries with relatively low new infection rates, such as Taiwan and South Korea, continue to heavily restrict international travel due to fear of importing new cases.
Several countries in Europe have also announced plans for a very gradual reopening. Denmark, the Czech Republic, Austria, Spain, and Italy have lifted some restrictions, but the vast majority of restrictions remain in place, as described in Exhibit 9. In the US, governors from several East Coast states and governors from several West Coast states have each started joint discussions to plan a reopening, although neither group has provided public guidance on a timeline or a reopening plan thus far.
Foreign experience offers three key lessons for the US. First, initial reopening timelines often prove too optimistic, and changes to initial plans have so far instead mostly involved moving toward more stringent restrictions and longer lockdowns. Second, even countries at the forefront of reopening have gradual and conservative plans. Third, recovery is quicker in manufacturing than in consumer services.
The Economic Recovery: A Scenario Analysis
We conclude by looking at what various paths for reopening would mean for the growth outlook.
We strongly expect the economy to begin to recover from the current bottom over the next few months as the peak virus hit fades thanks to partial relaxation of shutdown orders, adaptation to social distancing, and wider antibody testing to identify those who are now immune. While longer-lasting economic damage that delays the recovery is possible, so far the news has been mostly reassuring. On the labor market side, most layoffs have been temporary, meaning that most employer-employee relationships remain intact. On the business side, there has been no major uptick in bankruptcies so far. Admittedly, it is still very early to know how both concerns will evolve in coming months.
The quarterly growth path largely depends on three key parameters: the depth of the peak decline, the length of lockdown, and the speed of recovery during the reopening process. We estimate a 25% peak hit in April to manufacturing, a 30% hit to construction, a 60% hit to brokerage fees and home improvements, and a 14% hit to consumer services. We assume that the recovery starts in May and June and thereafter proceeds at a gradual pace, with the manufacturing and construction drag fading by 15% each month, and the drag from services activity fading by 12.5% each month.
Our baseline forecast for GDP growth continues to put the quarterly annualized pace at -7% in Q1, -34% in Q2, +19% in Q3, and +12% in Q4. This implies 2020 growth of -5.7% on an annual average basis and -4.9% on a Q4/Q4 basis.
The last three charts compare our baseline forecast to plausible upside and downside scenarios in which the initial peak decline in GDP is either smaller or larger, the time spent in lockdown (during which we assume the recovery rate is halved) is longer, and the pace of recovery is either slower or faster.
An upside scenario could involve greater progress on treatment, much slower spread in warmer weather, or more effective adaptation that makes social distancing measures less economically costly. A widely available vaccine would likely lead to an even sharper recovery of economic activity, but appears unlikely in the near future.
A downside scenario could involve a slower decline in the number of new infections, longer lockdowns, a second wave of infections that results in an oscillation between easing and tightening restrictions, larger second-round income effects, and more persistent avoidance of face-to-face interactions.
Exhibit 10 shows both the level (above) and growth rate (below) of output under our baseline assumptions and in an upside and a downside scenario. Specifically, we consider an upside case with a 7% peak hit to activity (vs. 13% in our baseline) and a downside case with both a 20% peak hit to activity and a lockdown that lasts for 6 months. The top chart shows the level of output for each scenario as a range corresponding to different recovery rates, from a very slow recovery in which the virus hit decays at a 5% monthly pace for manufacturing, construction, and services, to a faster recovery in which the hit decays at a 25% pace for manufacturing and construction and a 20% pace for services. The bottom chart shows the implied quarterly growth rates for each scenario, assuming the baseline recovery rate.
Exhibit 11 shows what an even broader range of scenarios that vary all three key parameters would imply for 2020 growth. In the most extreme cases shown on the left, the growth hit could reach double-digits. In the most optimistic case shown on the right, even a relatively small peak hit to activity, a 1-2 month lockdown, and a fast recovery would suggest 2020 growth of -3.3%, which would still be the lowest full-year pace since 1946. While we see both upside and downside risks to our baseline path, the numerical risks to full-year growth in 2020 skew downward.
Tyler Durden
Wed, 04/15/2020 – 21:50 - Ron Paul: People "Should Be Leery About" A COVID-19 Vaccine
Ron Paul: People “Should Be Leery About” A COVID-19 Vaccine
Authored by Adam Dick via The Ron Paul Institute for Peace & Prosperity,
Ron Paul, in a Monday interview with host Dan Dicks at Press for Truth, warns that people “should be leery about” coronavirus vaccines that may come out. Further, says Paul, a doctor and former United States House of Representatives member, “right now I wouldn’t think there is any indication for anybody to take them,” noting that “scare tactics” are being used to pressure people into thinking they should take such potential vaccines to protect against coronavirus.
Paul supports this conclusion by stressing in the interview the potential danger of a vaccine as well as the overstated threat from coronavirus.
Regarding the potential danger from a coronavirus vaccine, Paul discusses at the beginning of the interview how, in 1976 in his first week as a House member, Paul was one of only two members, both doctors, who voted against legislation that helped rush through a vaccine in response to swine flu. Paul describes the results of the push for people to take the swine flu vaccine as follows:
They rushed the vaccine through. The vaccine was not properly made. It had nothing to do with the virus that was out there, so it saved nobody’s life from it. It caused a lot of harm. More people ended up dying from the inoculation than died from the flu that year. And that sort of was a lesson, like that’s a little bit too extreme. But, that’s about what happens when governments get involved and you do things for political reasons.
There was also, because a lot of people ended up getting the vaccine, I think there were like 50 people or more who got Guillain-Barré syndrome, which is temporary total paralysis and you can die from it but most of them did get better. But, it was a very, very serious complication of a viral injection, you know, a vaccine.
Paul also discusses in the interview the overstated danger from coronavirus that is being used to scare people to take actions including to potentially take a coronavirus vaccine.
Paul notes that many of the people whose deaths have been blamed on coronavirus are elderly people, including people living in nursing homes, who have multiple other diseases. Further, explains Paul, doctors have “been instructed by [the Centers for Disease Control and Prevention] and other politicians that, when the doctors sign the death certificate, if [patients] have four different things but they happen to have a positive test for the virus that is to be put down as the major cause of death.”
“The numbers mean nothing,” concludes Paul regarding the daily tabulation of coronavirus deaths.
In addition, Paul explains that many more people than officially recorded have contracted coronavirus. Some of these individuals never became sick. Others got better without any treatment, says Paul, pointing to his son Sen. Rand Paul (R-KY) as an example. While Rand Paul was given a test that confirmed he had coronavirus, most people who have had coronavirus and suffered no to minor medical problems have not been tested. With “probably millions of people” having contracted coronavirus, Paul concludes that the percentage of people who have contracted coronavirus and have died as a result “is probably very, very small.”
While Paul says he would choose not to take a vaccine for the coronavirus should one appear next week even if people claim it is 99 percent effective, he says that the decision to take or not take a vaccine is one that should be made by each individual, who can discuss the vaccine alternative with a doctor. Absolutely, Paul concludes, that decision should not be made by government.
Watch here Paul’s complete interview, in which he also discusses how government actions taken in the name of fighting coronavirus are harming the economy and his support for people speaking out for ending coronavirus-justified encroachments on freedom:
Tyler Durden
Wed, 04/15/2020 – 21:30 - Bailouts Secured: Bezos Wealth Soars By $24 Billion As 17 Million Americans Lose Their Jobs
Bailouts Secured: Bezos Wealth Soars By $24 Billion As 17 Million Americans Lose Their Jobs
As the middle class gears up to once again unknowingly bail out the world via way of inflating the money supply, the rich are doing what they do during bailouts: getting richer.
In fact, just a week after 17 million Americans filed for unemployment, Jeff Bezos saw his net worth increase to $138.5 billion as Amazon’s stock hit all time highs on Tuesday, according to Bloomberg. The stock move was helped along by massive fiscal and monetary stimulus hitting the stock market.
Amidst historic unemployment numbers, banks are now claiming that loan losses fueled by job cuts could rival those from the 2008 financial crisis. Among the weakest sectors cutting employees first is the very sector that Amazon has disrupted: retail.
Bezos is among the many rich who have seen their fortunes recover as the Fed continues to focus on its sole mandate of jamming stocks higher by any means necessary. The combined net worth of the world’s 500 richest people is up 20% from its low on March 23, as a result.
Matt Maley, chief market strategist at Miller Tabak + Co said: “The wealth gap, it’s only going to get wider with what’s going on now. The really wealthy people haven’t had to worry. Yes, they’re less wealthy, but you haven’t had to worry about putting food on the table or keeping a roof over your head.”
Meanwhile, corporate insiders continue to buy their own stock at a quick clip, indicating that executives believe the worst could be behind us. Carnival Corp. board member Randall Weisenburger, for example, bought $10 million of his company’s stock in the open market last week.
While a couple of big names in oil have seen major losses, like Harold Hamm, who has seen his fortune fall 64% to $3.7 billion, other executives are experiencing significant gains.
Bezos has added about $24 billion to his wealth in 2020. His ex-wife, Mackenzie Bezos, has seen her net worth climb $8.2 billion to $45.3 billion. Elon Musk has seen his fortune rise by $10.4 billion and the Walton family at the helm of Wal-Mart has seen their combined net worth grow to $169 billion.
Maley concluded: “The unfairness of it all is who is going to benefit from it most. Money makes money.”
While Bezos is getting richer, The Verge has reported that Amazon is going to be making “drastic cuts” to affiliate commission rates starting next week:
Amazon is planning to make dramatic cuts to commission rates for its affiliate marketing program, which allows media organizations, e-commerce companies, and small and independent businesses to receive a cut of revenue from a sale if a customer lands on the product page and purchases the item through a provided link. The cuts go into effect on April 21st, according to CNBC, and some product categories will see drops of more than 50 percent.
The cuts will no doubt come as a blow to digital media companies who spent time building out infrastructure to recommend users buy products from Amazon. The Verge notes that “companies like BuzzFeed and New York Times-owned Wirecutter are among the more prominent commerce providers in the industry” – so we guess we can expect negative op-eds from those blogs at some point soon.
Finally, recall yesterday we reported that Amazon had fired 3 employees who spoke out about working conditions at the company during the coronavirus pandemic. The company confirmed that it had fired Emily Cunningham, Bashir Mohamed and Maren Costa for violating company policy.
Amazon commented: “We support every employee’s right to criticize their employer’s working conditions, but that does not come with blanket immunity against any and all internal policies. We terminated these employees for repeatedly violating internal policies.”
With regard to Mohamed’s firing, the company stated: “This individual was terminated as a result of progressive disciplinary action for inappropriate language, behavior and violating social distancing guidelines.”
That, or perhaps Amazon just found their lack of faith in the Jeff Bezos’ best intentions disturbing.
Tyler Durden
Wed, 04/15/2020 – 21:10 - Americans Need A Trampoline, Not A UBI Mattress
Americans Need A Trampoline, Not A UBI Mattress
Authored by Gonzalo Schwarz via InsideSources.com,
As governments around the world take unprecedented actions to address the coronavirus pandemic, one idea that is being floated as an ideal fix for this crisis is the adoption of a Universal Basic Income (UBI).
Adopting a UBI as a means to solve problems – from income inequality to mass unemployment caused by automation, and now economic shocks from a pandemic – has been touted by many, most prominently former Democratic presidential candidate Andrew Yang. Twitter founder Jack Dorsey recently donated $1 billion to fight the coronavirus, much of which will later be directed to UBI-related projects.
Despite marketing UBI as a creative solution to a novel pandemic, it’s yet one more attempt to exploit a crisis to push for a policy that proponents say can solve any and all problems. We must tread carefully.
In announcing his donation, Dorsey stated that the idea needs experimentation.
However, several UBI experiments have already been tried and most trials have been canceled for a variety of reasons.
Finland discontinued its program primarily because — surprise, surprise — giving money to jobless people without any requirements wasn’t very popular. The Canadian experiment in Ontario (which had some conditionality, making it not fully universal) was ended due to the high price tag.
In the United States, one of the pre-eminent UBI experiments currently being conducted is in the city of Stockton, California. And, even though there are some promising developments, it is too early to tell whether the program is successful. More important, an experiment at the local level is small in scale compared to the astronomical cost it would take to adopt it on a national level.
To address the current crisis, the $2 trillion stimulus package includes critical support for the health care sector and others affected by pandemic, including small- and medium-size businesses. In terms of direct financial support for people (which resembles a UBI), all Americans earning less than $75,000 as an individual and $150,000 as a family would receive $1,200 for each adult and an additional $500 per child, which could go up to $3,400 for a family of four. Furthermore, unemployment benefits have been increased and extended for an additional four months.
While the stimulus’ direct financial relief resembles UBI, it is important to note that it is at least somewhat targeted and not universal, even if the cap for such relief may still be too high. Nevertheless, we’re already being told the stimulus isn’t enough, and lawmakers are gearing up for a second stimulus without trying to improve on the first one or even waiting for the results.
Although there are those who do need direct cash payments, there is a strong case that our limited resources should be targeted so that relief can get to Americans most in need. Essential workers are not being laid off and many of the largest employers of essential workers have hired more employees. Amazon and Walmart have even awarded temporary raises.
Many non-essential businesses and their workers are still able to function remotely while complying with social distancing norms — leaving those businesses and individual livelihoods unaffected.
There have been salary adjustments all over the private sector, with many private sector CEOs like FedEx’s Fred Smith and others cutting their salaries and avoiding layoffs as much as possible. Additionally, a large number of public-sector jobs will most likely be completely spared.
Unfortunately, neither a UBI nor the current stimulus package makes such distinctions, which is why universal programs end up being more wasteful than necessary. Targeted social welfare is always preferable, particularly in more normal times when timeliness is less of a concern.
Before the public health crisis arrived, the labor market was extremely strong, with more job openings than people looking for work. That’s good news: As Nobel laureate Vernon Smith recently wrote, the labor market and our broader economy will bounce back in due time.
The most important conversation to have now is how the economy can go back to operating close to normally without compromising at-risk groups. The economic problems we’re experiencing have more to do with short- and medium-term uncertainty related to the labor market, and a UBI does not address any of those concerns.
While a temporary UBI may seem appealing for the duration of this crisis, buyer beware: Calls for UBI to become permanent are a certainty, as is currently happening in Spain. For too many, the coronavirus crisis is just one more nail to be solved with the hammer of a UBI.
Social welfare programs do have a role in providing a helping hand, especially in extraordinary times like these. But they should be a trampoline instead of a mattress — targeted and temporary rather than universal and permanent.
Tyler Durden
Wed, 04/15/2020 – 20:50 - Fox News Reports Coronavirus Originated In Wuhan Lab
Fox News Reports Coronavirus Originated In Wuhan Lab
Fox News reports that COVID-19 originated in the Wuhan Institute of Virology and that “patient zero” was a lab employee who became infected before spreading it in the community – just as we have reported repeatedly over the past three months, in exchange for which Twitter’s “appropriate content” arbiters deplatformed us without reason or explanation.
According to ‘multiple sources who have been briefed on the details of early actions by China’s government,’ the initial transmission of the virus was bat-to-human, and that the ‘official’ story amplified by the MSM – namely that the virus originated at the Wuhan wet market – was a coverup by Chinese officials ‘in order to deflect blame from the laboratory, along with the country’s propaganda efforts targeting the U.S. and Italy,’ reads the report.
In what may or may not be a bit of narrative shaping from ‘official sources,’ Fox reports that China’s Wuhan laboratory was working with COVID-19 “not as a bioweapon, but as part of China’s effort to demonstrate that its efforts to identify and combat viruses are equal to or greater than the capabilities of the United States.“
So – lab accident while trying to compete with America’s capabilities appears to be the official story.
On Tuesday, the Washington Post reported that the US State Department received two cables from US Embassy officials in 2018 warning of inadequate safety at WIF, which was conducting ‘risky studies’ on bat coronaviruses, according to the Washington Post, which notes that the cables have “fueled discussions inside the U.S. government about whether this or another Wuhan lab was the source of the virus.”
Responding to the report, Gen. Mark Milley, Chairman of the Joint Chiefs of Staff confirmed that the United States has taken a “keen interest” in the theory that COVID-19 originated at the Wuhan lab, but that “we don’t know for certain.”
On Tuesday, President Trump hinted that there was more to the story about the lab, after a Fox News reporter asked him about the Wuhan Institute and whether the US had considered the possibility that the virus may have leaked.
Trump’s response was extremely interesting, to say the least.
“More and more we’re hearing the story…we are doing a very thorough examination of this horrible situation that happened.”
As a follow-up, the reporter continued, “did you ever discuss with him concerns about lax safety protocols about that lab?”
Trump replied: “I don’t want to talk about what I discussed with him about the laboratory. I just don’t want to talk about it,” Trump responded.
Trump on reporting that the coronavirus, while a naturally-occurring virus, came from a Wuhan laboratory:
“I don’t want to say that … but I will tell you more and more we’re hearing the story…we are doing a very thorough examination”
Fox News’ report: https://t.co/dU7bU2qk05 pic.twitter.com/eks49IvbST
— JM Rieger (@RiegerReport) April 15, 2020
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China’s suppression campaign
Meanwhile, Fox News also reports that China “100 percent” suppressed and altered data – destroying samples, scrubbing contaminated areas, and stifling academic articles.
There were doctors and journalists who were “disappeared” warning of the spread of the virus and its contagious nature and human to human transmission. China moved quickly to shut down travel domestically from Wuhan to the rest of China, but did not stop international flights from Wuhan.
Additionally, the sources tell Fox News the World Health Organization (WHO) was complicit from the beginning in helping China cover its tracks. -Fox News
And now a word from Brendan Carr, commissioner of the FCC to Twitter CEO, @Jack.
I’m old enough to remember when posting this would get you deplatformed.https://t.co/zfbqFHiyqe
— Brendan Carr (@BrendanCarrFCC) April 15, 2020
Tyler Durden
Wed, 04/15/2020 – 20:22 - Tverberg: Why Economies Won't Be Able To Recover After Shutdowns
Tverberg: Why Economies Won’t Be Able To Recover After Shutdowns
Authored by Gail Tverberg via Our Finite World blog,
Amid all the clamoring for shutdowns to prevent the spread of COVID-19, there is one major difficulty, however – once an economy has been shut down, it is extremely difficult for the economy to recover back to the level it had reached previously. In fact, the longer the shutdown lasts, the more critical the problem is likely to be. China can shut down its economy for two weeks over the Chinese New Year, each year, without much damage. But, if the outage is longer and more widespread, damaging effects are likely.
A major reason why economies around the world will have difficulty restarting is because the world economy was in very poor shape before COVID-19 hit; shutting down major parts of the economy for a time leads to even more people with low wages or without any job. It will be very difficult and time-consuming to replace the failed businesses that provided these jobs.
When an outbreak of COVID-19 hit, epidemiologists recommended social distancing approaches that seemed to be helpful back in 1918-1919. The issue, however, is that the world economy has changed. Social distancing rules have a much more adverse impact on today’s economy than on the economy of 100 years ago.
Governments that wanted to push back found themselves up against a wall of citizen expectations. A common belief, even among economists, was that any shutdown would be short, and the recovery would be V-shaped. False information (really propaganda) published by China tended to reinforce the expectation that shutdowns could truly be helpful. But if we look at the real situation, Chinese workers are finding themselves newly laid off as they attempt to return to work. This is leading to protests in the Hubei area.
My analysis indicates that now, in 2020, the world economy cannot withstand long shutdowns. One very serious problem is the fact that the prices of many commodities (including oil, copper and lithium) will fall far too low for producers, leading to disruption in supplies. Broken supply chains can be expected to lead to the loss of many products previously available. Ultimately, the world economy may be headed for collapse.
In this post, I explain some of the reasons for my concerns.
[1] An economy is a self-organizing system that can grow only under the right conditions. Removing a large number of businesses and the corresponding jobs for an extended shutdown will clearly have a detrimental effect on the economy.
Figure 1. Chart by author, using photo of building toy “Leonardo Sticks,” with notes showing a few types of elements the world economy.
An economy is a self-organizing networked system that grows, under the right circumstances. I have attempted to give an idea of how this happens in Figure 1. This is an image of a child’s building toy. The growth of an economy is somewhat like building a structure with many layers using such a toy.
The precise makeup of the economy is constantly changing. New businesses are formed, and new consumers grow up and take jobs. Governments enact laws, partly to collect taxes, and partly to ensure fair treatment of all. Consumers decide which products to buy based on a combination of factors, including their level of wages, the prices being charged for the available goods, the availability of debt, and the interest rate on that debt. Resources of various kinds are used in producing goods and services.
At the same time, some deletions are taking place. Big businesses buy smaller businesses; some customers die or move away. Products that become obsolete are discontinued. The inside of the dome becomes hollow from the deletions.
If a large number of businesses are closed for an extended period, this will have many adverse impacts on the economy:
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Fewer goods and services, in total, will be made for the economy during the period of the shutdown.
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Many workers will be laid off, either temporarily or permanently. Goods and services will suddenly be less affordable for these former workers. Many will fall behind on their rent and other obligations.
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The laid off workers will be unable to pay much in taxes. In the US, state and local governments will need to cut back the size of their programs to match lower revenue because they cannot borrow to offset the deficit.
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If fewer goods and services are made, demand for commodities will fall. This will push the prices of commodities, such as oil and copper, very low.
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Commodity producers, airlines and the travel industry are likely to head toward permanent contraction, further adding to layoffs.
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Broken supply lines become problems. For example:
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A lack of parts from China has led to the closing of many automobile factories around the world.
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There is not enough cargo capacity on airplanes because much cargo was carried on passenger flights previously, and passenger flights have been cut back.
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These adverse impacts become increasingly destabilizing for the economy, the longer the shutdowns go on. It is as if a huge number of deletions are made simultaneously in Figure 1. Temporary margins, such as storage of spare parts in warehouses, can provide only a temporary buffer. The remaining portions of the economy become less and less able to support themselves. If the economy was already in poor shape, the economy may collapse.
[2] The world economy was approaching resource limits even before the coronavirus epidemic appeared. This is not too different a situation than many earlier economies faced before they collapsed. Coronavirus pushes the world economy further toward collapse.
Reaching resource limits is sometimes described as, “The population outgrew the carrying capacity of the land.” The group of people living in the area could not grow enough food and firewood using the resources available at the time (such as arable land, energy from the sun, draft animals, and technology of the day) for their expanding populations.
Collapses have been studied by many researchers. The book Secular Cycles by Peter Turchin and Sergey Nefedov analyze eight agricultural economies that collapsed. Figure 2 is a chart I prepared, based on my analysis of the economies described in that book:
Figure 2. Chart by author based on Turchin and Nefedov’s Secular Cycles.
Economies tend to grow for many years before the population becomes high enough that the carrying capacity of the land they occupy is approached. Once the carrying capacity is hit, they enter a stagflation stage, during which population and GDP growth slow. Growing debt becomes an issue, as do both wage and wealth disparity.
Eventually, a crisis period is reached. The problems of the stagflation period become worse (wage and wealth disparity; need for debt by those with inadequate income) during the crisis period. Changes tend to take place during the crisis period that lead to substantial drops in GDP and population. For example, we read about some economies entering into wars during the crisis period in the attempt to gain more land and other resources. We also read about economies being attacked from outside in their weakened state.
Also, during the crisis period, with the high level of wage and wealth disparity, it becomes increasingly difficult for governments to collect enough taxes. This problem can lead to governments being overthrown because of unhappiness with high taxes and wage disparity. In some cases, as in the 1991 collapse of the central government of the Soviet Union, the top level government simply collapses, leaving the next lower level of government.
Strangely enough, epidemics also seem to occur within collapse periods. The rising population leads to people living closer to each other, increasing the risk of transmission. People with low wages often find it increasingly difficult to eat an adequate diet. As a result, their immune systems easily succumb to new communicable diseases. Part of the collapse process is often the loss of a significant share of the population to a communicable disease.
Looking back at Figure 2, I believe that the current economic cycle started with the use of fossil fuels back in the 1800s. The world economy hit the stagflation period in the 1970s, when oil supply first became constrained. The Great Recession of 2008-2009 seems to be a marker for the beginning of the crisis period in the current cycle. If I am right in this assessment, the world economy is in the period in which we should expect crises, such as pandemics or wars, to occur.
The world was already pushing up against resource limits before all of the shutdowns took place. The shutdowns can be expected to push with world economy toward a more rapid decline in output per capita. They also appear to increase the likelihood that citizens will try to overthrow their governments, once the quarantine restrictions are removed.
[3] The carrying capacity of the world today is augmented by the world’s energy supply. A major issue since 2014 is that oil prices have been too low for oil producers. The coronavirus problem is pushing oil prices even lower yet.
Strangely enough, the world economy is facing a resource shortage problem, but it manifests itself as low commodity prices and excessive wage and wealth disparity.
Most economists have not figured out that economies are, in physics terms, dissipative structures. These are self-organizing systems that grow, at least for a time. Hurricanes (powered by energy from warm water) and ecosystems (powered by sunlight) are other examples of dissipative structures. Humans are dissipative structures, as well; we are powered by the energy content of foods. Economies require energy for all of the processes that we associate with generating GDP, such as refining metals and transporting goods. Electricity is a form of energy.
Energy can be used to work around shortages of almost any kind of resource. For example, if fresh water is a problem, energy products can be used to build desalination plants. If lack of phosphate rocks is an issue for adequate fertilization, energy products can be used to extract these rocks from less accessible locations. If pollution is a problem, fossil fuels can be used to build so-called renewable energy devices such as wind turbines and solar panels, to try to reduce future CO2 pollution.
The growth in energy consumption correlates quite well with the growth of the world economy. In fact, increases in energy consumption seem to precede growth in GDP, suggesting that it is energy consumption growth that allows the growth of GDP.
Figure 3. World GDP Growth versus Energy Consumption Growth, based on data of 2018 BP Statistical Review of World Energy and GDP data in 2010$ amounts, from the World Bank.
The thing that economists tend to miss is the fact that extracting enough fossil fuels (or commodities of any type) is a two-sided price problem. Prices must be both:
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High enough for companies extracting the resources to make an after tax profit.
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Low enough for consumers to afford finished goods made with these resources.
Most economists believe that an inadequate supply of energy products will be marked by high prices. In fact, the situation seems to be almost “upside down” in a networked economy. Inadequate energy supplies seem to be marked by excessive wage and wealth disparity. This wage and wealth disparity leads to commodity prices that are too low for producers. Current WTI oil prices are about $20 per barrel, for example (Figure 4).
Figure 4. Daily spot price of West Texas Intermediate oil, based on EIA data.
The low-price commodity price issue is really an affordability problem. The many people with low wages cannot afford goods such as cars, homes with heating and air conditioning, and vacation travel. In fact, they may even have difficulty affording food. Spending by rich people does not make up for the shortfall in spending by the poor because the rich tend to spend their wealth differently. They tend to buy services such as tax planning and expensive private college educations for their children. These services require proportionately less commodity use than goods purchased by the poor.
The problem of low commodity prices becomes especially acute in countries that produce commodities for export. Producers find it difficult to pay workers adequate wages to live on. Also, governments are not able to collect enough taxes for the services workers expect, such as public transit. The combination is likely to lead to protests by citizens whenever the opportunity arises. Once shutdowns end, these countries are especially in danger of having their governments overthrown.
[4] There are limits to what governments and central banks can fix.
Governments can give citizens checks so that they have enough funds to buy groceries. This may, indeed, keep the price of food products high enough for food producers. There may still be problems with broken supply lines, so there may still be shortages of some products. For example, if there are eggs but no egg cartons, there may be no eggs for sale in grocery stores.
Central banks can act as buyers for many kinds of assets such as bonds and even shares of stock. In this way, they can perhaps keep stock market prices reasonably high. If enough gimmicks are used, perhaps they can even keep the prices of homes and farms reasonably high.
Central banks can also keep interest rates paid by governments low. In fact, interest rates can even be negative, especially for the short term. Businesses whose profitability has been reduced and workers who have been laid off are likely to discover that their credit ratings have been downgraded. This is likely to lead to higher interest costs for these borrowers, even if interest rates for the most creditworthy are kept low.
One area where governments and central banks seem to be fairly helpless is with respect to low prices for commodities used by industry, such as oil, natural gas, coal, copper and lithium. These commodities are traded internationally, so it is not just their own producers that need to be propped up; the market intervention needs to affect the entire world market.
One approach to raising world commodity prices would be to buy up large quantities of the commodities and store them somewhere. This is impractical, because no one has adequate storage for the huge quantities involved.
Another approach for raising world commodity prices would be to try to raise worldwide demand for finished goods and services. (Making more finished goods and services will use more commodities, and thus will tend to raise commodity prices.) To do this, checks would somehow need to go to the many poor people in the world, including those in India, Bangladesh and Nigeria, allowing these people to buy cars, homes, and other finished goods. Sending out checks only to people in one’s own economy would not be sufficient. It is unlikely that the US or the European Union would undertake a task such as this.
A major problem after many people have been out of work for a quite a while is the fact that many of these people will be behind on their regular payments, such as rent and car payments. They will be in no mood to buy a new vehicle or a new cell phone, simply because they have been offered a check that covers groceries and not much more. They will remain in a mode of cutting back on purchases, not adding more. Demand for most kinds of goods will remain low.
This lack of demand will make it difficult for business to have enough sales to make it profitable to reopen at the level of output that they had previously. Thus, employment and sales are likely to remain depressed even after the economy seems to be reopening. China seems to be having this problem. The Wall Street Journal reports China Is Open for Business, but the Postcoronavirus Reboot Looks Slow and Rocky. It also reports, Another Shortage in China’s Virus-Hit Economy: Jobs for College Grads.
[5] There is a significant likelihood that the COVID-19 problem is not going away, even if economies can “bend the trend line” with respect to new cases.
Bending the trend line has to do with trying to keep hospitals and medical providers from being overwhelmed. It is likely to mean that herd immunity is built up slowly, making repeat outbreaks more likely. Thus, if social isolation is stopped, COVID-19 illnesses can be expected to revisit prior locations. We know that this has been an issue in the past. The Spanish Flu epidemic came in three waves, over the years 1918-1919. The second wave was the most deadly.
A recent study by members of the Harvard School of Public Health says that the COVID-19 epidemic may appear in waves until into 2022. In fact, it could be back on a seasonal basis thereafter. It also indicates that more than one period of social distancing is likely to be required:
“A single period of social distancing will not be sufficient to prevent critical care capacities from being overwhelmed by the COVID-19 epidemic, because under any scenario considered it leaves enough of the population susceptible that a rebound in transmission after the end of the period will lead to an epidemic that exceeds this capacity.”
Thus, even if the COVID-19 problem seems to be fixed in a few weeks, it likely will be back again within a few months. With this level of uncertainty, businesses will not be willing to set up new operations. They will not hire many additional employees. The retired population will not run out and buy more tickets on cruise ships for next year. In fact, citizens are likely to continue to be worried about airplane flights being a place for transmitting illnesses, making the longer term prospects for the airline industry less optimistic.
Conclusion
The economy was already near the edge before COVID-19 hit. Wage and wealth disparity were big problems. Local populations of many areas objected to immigrants, fearing that the added population would reduce job opportunities for people who already lived there, among other things. As a result, many areas were experiencing protests because of unhappiness with the current economic situation.
The shutdowns temporarily cut back the protests, but they certainly do not fix the underlying situations. Instead, the shutdowns add to the number of people with very low wages or no income at all. The shutdowns also reduce the total quantity of goods and services available to purchase, regardless of how much money is added to the system. Many people will end up poorer, in some real sense.
As soon as the shutdowns end, it will be obvious that the world economy is in worse condition than it was before the shutdown. The longer the shutdowns last, the worse shape the world economy will be in. Thus, when businesses are restarted, we can expect even more protests and more divisive politics. Some governments may be overthrown, or they may collapse without being pushed. I fear that the world economy will be further down the road toward overall collapse.
Tyler Durden
Wed, 04/15/2020 – 20:10 -
- "Major Blow To US": Large Group Of US-Backed Fighters 'Defect' To Assad Forces
“Major Blow To US”: Large Group Of US-Backed Fighters ‘Defect’ To Assad Forces
The brutal proxy war in Syria, which has had the deep involvement of American intelligence and the Pentagon, has been wrapping up after grinding on for nine years. With the coronavirus pandemic now completely taking over the news cycle, and as Washington struggles to contain both the virus and devastating economic fallout, Syria has taken a far back seat in Western media despite the continued presence of American forces on the ground.
It seems Damascus is ready to take advantage of the situation, rolling back US influence and presence in the country. Syrian media as well as local sources say a large group of US-backed and trained fighters from al-Tanf camp, where American special forces have maintained a presence for years, have defected to the Syrian Army.
US special forces at Tanf base, file image. “Several U.S.-backed rebel fighters willingly surrendered themselves to the Syrian Arab Army (SAA) forces in the Homs Governorate this week,” Beirut-based Syrian war monitor al-Masdar News reports, citing local sources. “Members of the U.S.-backed rebel forces in the Tanf region of southeastern Homs agreed to surrender their weapons and equipment to the Syrian Arab Army after lengthy negotiations.”
Pro-government media described it as “a major blow to the United States” in the region. Video circulated on social media purporting to show a convoy of vehicles leaving the al-Tanf region to join the pro-government side.
The video was reportedly taken by a reporter with the pro-government broadcaster “Sham FM” and purports to show the defectors entering Tadmour from al-Tanf in southeast Homs province:
بالفيديو .. الجهات المختصة تتمكن بعملية نوعية من تأمين انسحاب وتسوية أوضاع مجموعة كبيرة من نخبة المقاتلين لدى المجموعات المسلحة المتمركزة في قاعدة التنف بكامل سلاحهم و عتادهم و قاموا بتسليمها للجهات المختصة
شام اف ام pic.twitter.com/SyPjlzGIZ5
— Yusha Yuseef 🇸🇾 (@MIG29_) April 14, 2020
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An 8-vehicle convoy reportedly departed the area with US military presence and drove to a Syrian Army post across the desert, where militants handed over their equipment and weapons.
The conditions of the agreement have not been made known, but negotiations had reportedly been ongoing for some time. More broadly, Damascus has pursued a ‘reconciliation’ program – offering select ‘rebel’ militant groups amnesty opportunities if they switch back to pro-government forces.
For years the Pentagon has been training and equipping the Kurdish and Arab ‘Syrian Democratic Forces’ (or SDF) — however, the Kurdish-dominated group in Syria’s northeast has lately felt betrayed by Washington last year essentially giving Turkey’s Erdogan a green light to invade northern Syria.
In particular, America’s control of al-Tanf and its border crossing into Iraq has also been consistently condemned by Russia. The US has long maintained its presence is needed to fight ISIS, but Russia has called it an imperialistic land grab of sovereign Syrian soil in order to ultimately pressure Assad.
Tyler Durden
Wed, 04/15/2020 – 19:50
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